6. The office bearers of the organization should not be elected representative of any
political party

7. The organization should have proper system of accounting, which should have been
audited & published every year and they should not have any serious irregularities

8. The application should clearly reflect the source of funds utilized earlier for credit

9. The bylaws of the organization should have provision for getting loans from various
funding agencies

10.
NGOs seeking loan assistance of `
1 crore and above, at the time of application should be rated by any reputed credit-rating agency like
MCRIL, CRISIL, CARE, SMERA, Access Development Services.

Security

1. RMK does not take any collateral security for sanctioning loan up to
`
1 crore.

2. If the loan amount of the borrowing organization exceeds `1
crore, it has to provide 10% of the sanction amount as security in shape of Fixed Deposit.

3. In case of State Govt. organization, the organization/ department has to arrange State Govt. guarantee if their balance sheet shows
deficit/loss.

Margin Money

The organization applying for loan to RMK has to contribute 10% of the
loan amount sanctioned.

Maximum Loan

1. `50,000/- per woman beneficiary for income generating activities.

2. `1,00,000/- per
woman beneficiary for low cost house construction/
repair and maintenance.

Note:- The above ceiling on individual loans are subject to extant RBI
guidelines.

Procedure
for Sanction of Loan

Once
a completed application with the required documents is received in RMK
office, a pre-appraisal study would be undertaken through field visits
in order to ascertain the veracity/ genuineness of the claim as made in
the application and the technical/ financial viability of the proposal.
The appraisal report is placed before the Loan Committee for decision on
the admissibility of the loan application applied for and its amount.
Once the decision of the Committee has been taken, a Sanction Letter
comprising of the terms & conditions of the loan is sent to the
organization concerned for execution of the agreement.

This scheme is
for providing working capital term loan to the intermediary organization for backward and forward marketing linkage of product of Women SHGs/Individuals and group entrepreneurs
including technology transfer, education and skill up gradation.
The applicant has to submit a detailed project proposal to RMK.

Eligibility Norms

a) The organization should be registered for not less than 3 years as on the date of application to RMK.

b) The organization should have minimum three years experience in the field of micro-credit management,
SHG formation, SHG promotion & development.

c) It should have excellent recovery management (at least maintained 90% recovery rate in case of loan availed from other funding agencies/internal loan of SHG).

d) There should be proper & specific clause/provision in the By-laws Memorandum of Association of the
organization having power to borrow or to raise loan from any outside agencies.

e) The office bearer of the organization should not be elected members of any political party.

f) The organization should have a proper system of maintaining accounts, which should have been audited &
published every year and there should not have been any serious irregularities.

g) The organization has to submit a detail project proposal, which should be economically and technically
viable and fulfill the social objectives/responsibilities of the organizations.

h) The borrowing organization should have availed a minimum loan of `
25 lakhs or above under micro-credit scheme of RMK/SIDBI/NABARD/Commercial Banks/Other Financial Institutions.

(This condition will not be applicable for Govt.
organization).

Preferential Conditions

1. The organization should preferably employ women members of the SHG or any poor women entrepreneur
or women getting shelter in the shelter home run by various Ministries of India, State Govts. and other Funding Agencies.

2. The NGO has to ensure `End to End' solution of the women SHG members/women entrepreneurs for smooth
operation of their activities.

Purpose of Loan

The loan under WCTL can be utilized by the borrowing organization for the following purpose :-

1. For development of infrastructure to implement micro-credit programme like :-

- Vehicle to carry SHG product from production place to market place.
- Work shed to carry out SHG activities.
- Business outlets/shops for selling of SHG products.
- For establishment of chilling plant, small size cold store,
godown, local hat etc.

2. To carry out various Govt. program by investing fund availed from RMK by employing SHG members/
women entrepreneur.

3. Procurement of SHG product and marketing.

4. Purchase/Lease of land to carry out corps cultivation by employing SHG members.

5. To provide loan to individual women micro entrepreneur or group of women entrepreneurs to undertake
income generating activities. The organization has to undertake the to marketing of the product of women
entrepreneurs and ensure for repayment of loan.

7. To repay the loan availed by the societies (1/3 women members)/women SHG in higher interest rate either
from money lender or funding agencies.

8. To provide technical services to women SHG/women entrepreneur.

9. To carry out various training/capacity building/skill up gradation/education program of SHG members/small women entrepreneur.

10. For export business of the products of SHG/women entrepreneur.

11. To organise "Exhibition and sale" for marketing of products of SHG/micro entrepreneur.

12. To extend loan to women SHG/group of women entrepreneurs for the purpose mentioned in SL.1 to 11.

Maximum Amount of Loan

1. The maximum amount of loan to be provided by RMK to borrowing organization
will be
`
1 crore per State.
However the organization could avail maximum loan of `
3 crores to operate in 3 States.

2. Loan amount is to be decided on case to case basis considering the actual need of the loan, financial
health/management of the organization, experience/exposure in micro-credit & creditability of the
organization.

3. The second loan will be considered only after complete repayment of first loan.

4. The working capital loan will be assessed as under :-

Amount of proposed credit proposal - available margin with the
organization = Working Capital Term Loan (WCTL).

5. The review of WCTL will be made at the end of each financial year.

Security

1. No security will be taken for loan upto `
1 crores.

2. In case of loan above `
1 crores, the organization has to arrange 25% of the sanctioned amount as security in shape of fixed deposit/mortgage of land and building.

3. All the movable assets created out of RMK's loan will be hypothecated to Rashtriya Mahila Kosh.

4. The organization has to mortgage (equitable mortgage of immovable properties that is deposited of title deeds of immovable properties) the immovable properties which will be created out of RMK's loan.

5. In case of corporation/federation or any such State Govt. organization
will require to be arranged State Govt. guarantee for borrowing if running in deficit/loss.

6. The immovable assets which would be created out of RMK loan would continue to be used for various activities of self help groups, in future even after the borrowing
organization repays the entire loan to
Rashtriya Mahila Kosh.

7. Where the on lending of the loan is made to the self help groups by the NGO/IMOs the assets created out of
the loan will continue to remain in the same of the self help groups.

Insurance

The borrowing organization has to ensure adequate insurance cover of the movable properties/assets
which will be created out of RMK's loan.

Repayment

To be repaid within 36 months in 8-10 quarterly installments with an initial gestation period of 6 months.

Margin

The
organization is required to contribute a margin of 10% of the total working capital term loan to be
availed form RMK.

Disbursement

To be disbursed in two installment (50% each) depending upon satisfactory utilization
of loan.

Monitoring

Like other schemes there will be one pre sanction monitoring and one post monitoring to be
conducted by RMK to evaluate the loan proposal/utilization of loan.Eligibility
:Other eligibility
norms remain the same
as mentioned in the table I above.

a) The NGOs/SOs/VAs should have broad based objectives, serving the socio economic needs of the community
especially the women & weaker sections.

b) The Organizations should have necessary flexibility and professional competence, basic financial management
capacity & organizational skill to implement the lending programs.

c) The office bearers of the NGOs/SOs/VAs should not be elected members of any political party.

d) The NGOs/SOs/VAs should have a proper system of maintaining accounts which should have been audited &
published every year and there should not have been any serious irregularities.

e) The organization should be registered for atleast 3 years as on the date of application to RMK.

f) The NGO should have successful track record for a minimum period of 3 years in implementation of RMK
scheme or similar schemes.

g) The application form should clearly reflect the source of funds utilized
earlier for credit.

h) The recoveries of loan should be of high order (of at least 90% of its due.)

i) There should be adequate infrastructure & staff to implement micro credit program.

j) There should be proper & specific clauses in the bylaws/Memorandum of Association of the
organization having power to borrow from any outside agency.

k) There should be an appropriate reflection in the organization audited accounts and balance sheet in
respect of its experience in providing credit and recovery., Audited account should reflect sound
financial strength.

Maximum Credit Limit :` 5 crores.

1. To be eligible for credit limit above`1
crore,
the NGO should have availed of minimum
`
2
crore loan under
Micro Credit Scheme of RMK/SIDBI/NABARD /Commercial Banks/Other Financial Institutions.
2. To be eligible for credit limit upto`
1
crore, the NGO should have availed of minimum `
1 crore loan under
Micro Credit Scheme of RMK/SIDBI/NABARD/Commercial Banks/Other Financial Institutions.

How does a Franchisee Function?

Franchisee is authorized to accept applications on behalf of the RMK, do preliminary scrutiny, conduct
pre-sanction study by the identified monitors or their own officers and sanction loans to
the eligible applicants as per the existing norms of RMK.

The franchisee will then sanction, disburse the amount, accept disbursement certificates,
utilization certificates etc, conduct post-sanction study and release subsequent installments
as per the existing procedures. Besides sanctions and disbursements, the franchisee will also
undertake responsibility for recovery and follow-up action of loans disbursed by
them/ RMK.

Note:

Organizations eligible for Franchisee Scheme / any other schemes of RMK may
avail facilities under both the schemes. While loan availed under Franchisee Scheme would be
utilized for on lending to other NGOs, loan availed under other schemes of RMK would be utilized
for on lending to the SHGs developed by the organization exclusively.

Re-finance is available only for financing poor women in areas which have not been
covered by any other financing agency or the women have not availed assistance under any
other Government supported/subsidy scheme.

Eligible criteria

1. The bank should have been registered for at least 5 years at the time of applying for
re-finance.

2. The bank should not have been making any losses as per its audited balance sheet for
the previous 3 years.

3. There should not be any major adverse remark in the Audit Report of the bank in the
previous 3 years.

4. Recoveries of loans by the banks in the previous 3 years should be of a reasonably high
order.

Upper ceiling for re-finance

Total re-finance to any Mahila/ Urban Cooperative Bank at any given time will not be more than 4
times the "Owned Funds" of the bank as reflected in its balance sheet of the
previous year.

The
Nodal Agency (NOA) Scheme was introduced in the year 1996-97 with
the objective of taking help of reputed and experienced organizations,
which may not necessarily be borrowing partners of RMK, for identifying and
assisting new NGOs to eventually link-up with RMK for extending credit
facilities to women for their income generating activities.

iii.
To help in organizing programmes on awareness generationcum capacity building of NGOs / SHGs /JLGs in different regions.

iv.To organize meetings. seminars / workshops / training in area of
operation on behalf of RMK.

v.To guide / mentor
and follow up loans proposals and facilitate recovery of loans given by RMK.

Other Norms:

vi. Nodal Agency may appoint a dedicated
Nodal Officer amongst their staff. No remuneration will be paid by RMK.

vii.Nodal Agency has to sign a MoU which will be valid for 2
years.

viii.The agency would be entitled to receive performance based
incentive equal of 1 % of the total loans disbursed out of the sanction
made by RMK upon its recommendations and 1 % on recovery of the loans
thereof, if loans are repaid as per repayment schedule.

ix.An amount upto `
1 lakh for a day long programme is admissible for conducting awareness meeting / training /
seminar / camps etc. as decided on case to case basis and as per actual
expenditure.

Sometimes, the financial intermediation role may be in conflict with
the market development role of an apex micro-finance organization. The objective of
funding agencies and donors is often rapid disbursement of funds due to pressure of
targets or policy goals. However, there is a constant danger that such target oriented
short sighted disbursement pressures may (a) lower standards of credit worthiness (b)
reduce the incentive for IMO improvement and (c) conspire against the market development
role. In other words, the short term
interests of rapid disbursement can swamp the long term sustainability of the apex
organization.

To avoid this, Rashtriya
Mahila Kosh (RMK) was set up as an independent organization, governed by its Board of
Governors, to protect it from undue pressures from donors and IMOs.

From the start, RMK has been concerned with its
sustainability.
Its policies have been carefully developed accordingly. There is no subsidy element in its
interest rate. There are strict criteria for selection of IMOs. There is a strict system
of pre-sanction and post-sanction studies of the IMOs and the Self Help Groups
(SHGs)
before sanctions and releases are made. The stability of SHGs is a basic criterion which
is looked into before loans are extended. RMK has adopted a demand driven rather than a
target oriented approach to its loaning activities.

RMK gives as much
importance to its market development and advocacy roles as to its wholesaling role.
RMKs Information-Education-Communication (IEC) activities, therefore, are a vital
component of its programme. This creates more awareness of the micro finance concept in general and RMK
schemes in particular. Institution building protects the quality of RMK work and increases
its outreach.

RMKs IEC Activity includes both the market development role and the advocacy role-
Under the market development role, RMK is currently
undertaking :

a) Training of existing and new NGOs and other intermediate level partners
b) Training of SHG leaders and borrowers
c) Training of monitors
d) Training of master trainers
e) Orientation and Training of Nodal NGOs
f) Training of Govt. officials and workers (like
ICDS/IMY staff) engaged in group dynamics,
poverty alleviation schemes and income generating programmes
g) Awareness workshops for existing and potential intermediate
organizations and
women at large
h) Contacts with media and media visits
i) Exhibitions and Fairs
j) Training of RMKs own staff and officers and participation by RMKs officers in national and
international level conferences etc.

In the near future, RMK also plans to undertake :

a) conducting impact studies and feasibility studies
b) skill training of women
c) enterprise development training of women and NGO staff
d) product and market development
e) development of data bases and trade related information systems
f) acquisition of computer and institution of Information Management System

As part of its advocacy role, RMK is organizing :

a) seminars/workshops with government, banks, foreign funding institutions, apex
organizations,
intermediate organizations and women for development of policy
b) continuous interaction with the Ministry of Women & Child Development and other Ministries
of Government, State Governments, RBI and NABARD, etc.

The aim is to bring in
larger numbers of new and small intermediate organizations into the RMK fold to increase
its outreach, specially in under covered areas. This is to be done by reorientation,
training, capacity building and technology transfer.

RMK delegates the following functions to well-established, tried and tested NGOs/ reputed
Govt. organizations which possess the necessary infrastructure and experience in group dynamics
and micro-finance : identification of potential NGOs, pre-sanction studies, training,
monitoring and processing of applications upto the stage when the new intermediate organisation
can be linked directly with RMK under its loan schemes and other capacity building training
programmes.

b)
Concept and Features of Self Help Groups (SHGs)

The National Credit Fund for Women or the Rashtriya Mahila Kosh
(RMK) has found SHGs to be very useful in
generating savings, in the successful delivery of credit to individual women and in effecting recovery.

The essential features of these SHGs are :

i) they are cohesive, homogenous and based on affinity
ii) they are small (between 10-20 women in each group)
iii) they are voluntary
iv) they are stable
v) they have a democratic mode of functioning and decision-making
vi) they have been given the requisite training in maintenance of accounts
vii) they combine social and economic objectives
viii) they are owned and managed by their own members - (if institutions who lend money to them or NGOs who
promote them, become too involved in their management, they will subvert the autonomy and independence
which are their main strengths - promoters and lenders must err on the side of doing too little rather than
too much)

Throughout the country, it has been found that functioning in a group gives the poor and often illiterate women more confidence - they are able to undertake decisions
and activities which they would not have been able to do singly. The peer pressure is very useful for recovery and is RMKs best collateral.

Experience also shows that groups can also be the means for members to acquire other skills they need like learning
how to read and write. Since some form of group organisation is necessary for adult literacy training, the SHGs have often facilitated this. If members learn as well as save
together, the group is stronger for both purposes, and achieve educational as well as economic goals.